That’s enough to end family homelessness in America

They’re able to make such astronomical amounts thanks in part to the many loopholes in our financial regulation. So-called “activist” hedge funds, for example, abuse lax securities laws to gain large stakes in public companies, and then demand cost-cutting, layoffs, and more debt. These moves enrich the hedge funds while often dooming the companies they acquire.

To top it off, hedge funds are costly investments whose performance often just mirrors the stock market overall, despite charging exorbitant fees. In 2015, those fees added up to a cool $13 billion in compensation for the 25 managers at the top of Reuters’ list.

$13 billion could end family homelessness for ten years

The Department of Housing and Urban Development (HUD) has said that it would take $11 billion over ten years to provide housing subsidies to 550,000 more families — an amount that could effectively end family homelessness, since in January 2015, HUD found that 564,708 people were homeless on a given night.

The bank worker panelists, representing varied regions of the country and a number of large financial institutions, told similar stories about the toxic work environment created by practices designed solely to provide maximum profit margins for the banks. Khalid Taha, an Iraqi immigrant to the United States, imagined his job with Wells Fargo as the fulfillment of the American dream; but it turned into a nightmare, he testified, when the cumulative pressure of persuading multiple customers to open new banking accounts every day led to his hospitalization for exhaustion.

The bank employees spoke of their commitment to quality customer service and their dismay at being compelled to engage in transactions they knew would result in great financial damage to consumers. Modern bank teller positions are entirely “sales oriented,” said Oscar Garza, who worked at JP Morgan from 2010 to 2012. Garza testified that he and other JP Morgan workers were instructed to open new accounts at “any cost” and even to falsify financial information to help customers qualify for loans. Similarly, the bank employees explained that quotas and incentives mandated by corporate offices tacitly encourage deceptive behavior. Cassaundra Plummer, formerly an assistant sales teller at a Maryland branch of TD Bank, remembered her manager’s instructions to “only focus on the positives” rather than fully explain the terms of the financial products she was supposed to be selling.

Banking on the Hard Sell includes many more personal accounts like these. Caitlin Connolly, the Coordinator of NELP’s campaign on sales quotas, emphasized the need for additional regulations to address the issue of aggressive bank sales tactics. The 2008 financial crisis stirred significant public discussion of the behavior and business practices of big banks, Connolly noted; but attention hasfaded since then, she said, with bad implications for bank employees and consumers alike.

A majority of the bank employees at the hearing said they had no knowledge of the consumer protections and other provisions of the Dodd-Frank Act – the landmark financial-reform measure enacted in the aftermath of the 2008 financial crisis.

The last panelist, Brian Simmonds Marshall, Policy Counsel for AFR, pointed out that federal regulators have taken significant steps under Dodd-Frank to prohibit compensation practices that could encourage risky or deceptive behavior on the part of high-level bank executives; the NELP report and the testimony of the bank employees, he said, underscore the need to apply the same kind of scrutiny to the compensation and
management of front-line bank workers. Financial oversight agencies, Marshall said, should not just be looking for violations of the rules, but for the root causes of those violations.

Following the briefing, bank employee panelists, along with AFR and NELP staff, held individual meetings with regulators at the Office of the Comptroller of the Currency and the Consumer Finance Protection Bureau to further discuss the issues raised at the event.

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